Killing Hope: The Sad Death of the Millionaires Tax

Gov. Jerry Brown on March 15th explaining to reporters his "compromise" with unions over the competing tax initiatives.

Last week news of a “compromise” between Jerry Brown and the coalition behind the Millionaires’ Tax was announced and was seen by some in the media as a victory for progressives. In the LA Times the Republicans greeted the news by saying that the Governor had surrendered to a “backwater union” (my statewide union, the California Federation of Teachers) by giving in and upping the taxes on the wealthy and lowering the sales tax in his initiative.

While the “compromise” does up the progressive elements of the tax and lower the regressive elements, it is still structurally the same as the Governor’s original initiative, hangs on to the regressive sales tax, and continues to be temporary without any of the guarantees of higher education funding beyond community colleges or any of the other specific requirements that the Millionaires’ Tax contained. Indeed, it’s likely that what this new measure will do is go to the general fund to offset costs rather than restore cuts and/or create new jobs.

Worse still, the deal was struck after the seventh straight poll showed the Millionaires’ Tax winning and weathering opposing arguments better than the Governor’s measure which dropped to 46% approval after opposition’s arguments were introduced. Why did this happen then? Not because new polling showed that a fusion of measures stood a better chance of winning but because the CFT was isolated, threatened, and folded in the face of those threats .

The end of the Millionaires Tax of 2012.

Specifically, the representatives of the Governor who says he has “no ego” in this (when speaking to reporters) insisted that the Millionaires’ Tax be dropped because Brown would be perceived as a “failure” if his measure didn’t succeed while the Millionaires Tax won the day. Thus, Democratic insiders told CFT that their lobbyists would be persona non grata in Sacramento if they kept the Millionaires’ Tax in the game.

In addition to this, the California Teachers Association and the Service Employees International Union, rather than standing with their fellow workers and pressuring the Governor to drop the sales tax, threatened that they would spend big money to attack the Millionaires Tax so it would be doomed to fail and would punish community groups allied with CFT. Labor allies like the California Nurses Association also threatened to leave the coalition and side with Jerry Brown. Rather than standing up to this kind of bullying and betrayal, CFT leadership unilaterally negotiated a deal without consulting the membership and presented it to the Executive Council of the CFT as a fait accompli. The CFT Executive Council then rubber-stamped the decision without going back to their members for input.

In short, nobody was joining hands and singing “Kumbaya” at the negotiating table. It was a process driven by fear and profiles in cowardice were plentiful.

This capitulation is a victory for business as usual in Sacramento—threats, big money, and power politics at their worst. It is a prime example of statewide union leaders caring more about politicians in the Capitol than their members and of Democratic insiders disciplining progressives through coercion when their weak arguments failed.

Thus, the most popular of the three initiatives that clearly drew a line between taxing the 1% rather than the 99% was abandoned in favor of a far weaker proposal that keeps a regressive sales tax that will likely drag this new measure down to defeat. I repeat, there is no research to suggest that this new measure, which is structurally the same as the Governor’s original measure, will do any better than the 46% approval rating the original measure had after opposition arguments.

If that is not bad enough, the fact is that no initiative has ever been able to gather the requisite number of signatures needed in the short time period that remains to re-write and qualify the compromise measure—more than 1 million signatures in less than 2 months. It’s the Hail Mary of Hail Marys. And if you weren’t skeptical already, you should be when learn that Brown is continuing to circulate his first, badly flawed measure as a safety net, while the Millionaires Tax will surely be pulled before we even know if the compromise will make the ballot. It’s a big gamble at best, a bait and switch at worst. And the lowest polling, surely doomed, Molly Munger measure is still in the game while the best polling, most likely to pass measure is now dead.

Dead along with it is a historic opportunity to have a clean fight on progressive taxation framed around the growing economic inequality in this country. Only the political wonks will care that the sales tax is now at a quarter cent instead of a half –cent (the poor will still feel it). The anti-tax zealots will hang the sales tax around the neck of the compromise proposal (and/or Brown’s original proposal in the very likely event that the compromise fails to make the ballot) and the social justice argument will be lost in favor of Brown’s “shared sacrifice” case designed to please the Chamber of Commerce. No matter how those in favor of this sell-out frame it, the new initiative blurs the issues and makes it more likely that California’s education system and vital public services will not get the revenue they need.

Also dead is a movement that united workers, students, and the vast majority of the public. It would have been a good thing for the big unions to lose this battle rather than win through intimidation. This deal rewards bad behavior inside labor and the Democratic Party. It is a win for the same old business as usual and hurts rather than helps labor’s ability to put on a good face to fight the paycheck deception measure coming this fall.

Simply put, it’s not good to act like a bunch of inside game bullies when you are trying to protect your ability to spend money in politics. It just makes it easier for the corporate crew to demonize you when you live up to the stereotype of “big labor” with its “union bosses” doing backroom deals with the Governor. And it’s hard to talk movement when you are in an alliance with Occidental Petroleum and the hospital lobby.

To those who would say a public airing of this dirty laundry is damaging to the movement: it is this behavior, not the criticism of it, which will be the lead in labor’s obituary.

Of course, we need to defeat paycheck deception and we need new revenue even if it comes in the form of a lesser measure, but in their zeal to kill the Millionaires Tax, the Democrats and their pit bulls in labor have been their own worst enemy—throwing movement politics under the bus and killing hope in favor of the inside game.